Asbury Automotive Group revives but revises its acquisition of most of Dallas-based Park Place Dealerships for $735 million.
It’s a scaled-down version of a more-encompassing $1 billion deal announced in December, before the pandemic hit the U.S., then nixed because of it.
Duluth, GA-based Asbury canceled the original deal in March shortly before the expected closing, citing uncertainty brought on by business shutdowns – including dealerships – aimed at limiting the spread of the coronavirus.
Publicly owned Asbury, ranked No.7 on the 2020 Wards Megadealer 100 with total 2019 revenue of $7.2 billion, says it reconsidered since auto sales bounced back after April.
The new transaction includes 12 new-vehicle franchises: three each for Mercedes-Benz and Sprinter van, two for Lexus, and one each for Jaguar, Land Rover, Porsche, and Volvo.
The canceled original deal had involved 19 franchises, including five ultra-luxury brands: Bentley, Rolls-Royce, McLaren, Maserati and Karma, plus an open point for Jaguar-Land Rover. The exotics and the open point are no longer part of the deal.
The original, $1 billion purchase price also included $215 million for real estate. Under the new transaction, Asbury says it will lease the land “under favorable terms with purchase options.”
The former and current deals are “apples and oranges,” because of the real estate, says Erin Kerrigan, founder and managing director of Kerrigan Advisors, Irvine, CA.
George Karolis, president of The Presidio Group, an investment bank in San Francisco, says, “The majority of the difference relates to the exclusion of two dealerships and certain properties being leased instead of purchased upfront.”
Asbury says the new purchase represents about $1.7 billion in expected annualized revenue. That’s down from about $1.9 billion for the original deal.
The new purchase price also reflects a multiple of 7.7 times a target of annual earnings before interest, taxes, depreciation and amortization of $95 million, Asbury says. The original deal reflected a multiple of 10 times EBITDA of $100 million, it says.
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 285 dealerships generating more than $9 billion in client proceeds, including two of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group and Leith Automotive to Holman. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients the assurance of a conflict-free approach.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, the industry authority on dealership buy/sell market trends and valuations and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases The Kerrigan Index™ comprised of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2024 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
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